Answer: Option A
Answer: (a)
As per Article 275 of the Constitution, the Finance Commission should recommend ‘Grants-in-Aid’ for the states out of the Consolidated Fund of India. The Fifteenth Finance Commission (FFC) has recommended the following six types of grants in aid:
Revenue deficit grants: Post vertical devolution from centre to states, fourteen states faced revenue deficit and they have been recommended for revenue deficit grants (also called post-tax devolution revenue deficit grants)
Grants to local bodies: The FFC has recommended Rs. 90,000 crores of grants for local bodies in 28 States for the period 2020-21. The inter-state distribution for local bodies among the States will be based on population and area in the ratio of 90:10
Disaster management grants: The coverage of funds recommended by FFC goes beyond the disaster response funds that already exist at national (NDRF) and state (State Disaster Response Funds, SDRF) levels.
FFC has recommended the creation of funds for disaster mitigation along with disaster response which will now together be called as National Disaster Risk Management Fund (NDRMF) and State Disaster Risk Management Fund (SDRMF).
Sector-specific grants: The FFC is considering recommending, in the final report (for 2021-22 to 2025-26), sector-specific grants for nutrition, health, pre-primary education, judiciary, rural connectivity, railways, statistics and police training and housing.
However, to augment the efforts of the States towards reducing and ultimately eliminating malnutrition, FFC has recommended grants for nutrition even in 2020-21.
Performance grants: FFC will be recommending performance-based incentives to States for the period 2021-22 to 2025-26 in their final report (and before that it wants that States should do the groundwork to implement these reforms), in six areas if they implement reforms.
These are Agriculture reforms, Development of Aspirational Districts and Aspirational Blocks, Power sector reforms, enhancing trade including exports, Education, Promotion of domestic and international tourism.
State-specific grants: FFC believed that because of its recommendations for 2020-21, no State should, in absolute terms, get less than the total amount of devolution and revenue deficit grants estimated to be received in 2019-20.
Since, tax devolution and revenue deficit grants are projected to decline from 2019-20 to 2020-21 for three states, namely, Karnataka, Mizoram and Telangana, so FFC has recommended State-specific grants (special grants) to these three states.